International Journal of Humanities and Social Science Research

International Journal of Humanities and Social Science Research

ISSN: 2455-2070; Impact Factor: RJIF 5.22
Received: 18-01-2019; Accepted: 20-02-2019
www.socialsciencejournal.in
Volume 5; Issue 2; March 2019; Page No. 67-70

Rural financial inclusions through digital banking services in India

Venkatalaxmi P1, Dr. K Ramachandra2
1
Research Scholar in Commerce, Assistant Professor, Seshadripuram First Grade College, Yelahanka, Bangalore, Karnataka, India
2
Professor & PG Co-Ordinator, Maharani Womens Arts, Commerce and Management College, Sheshadri, Bangalore, Karnataka, India

Abstract
Financial inclusion standing is most likely to boost through technological interventions as there are distribution challenges
because of localized constraints. This paper focus on digital banking services which are helpful in financial inclusion of rural
sector as like maximum poor income people can involve in banking activities. And the government has taken the step to
involve entire India to involve digital banking sector. This study also highlights the result of digital banking initiative on
the beginning of financial inclusion. The developing economy can simply connect the various group of society and
might facilitate to realize the target of monetary inclusion through digital banking. The various secondary sources i.e. Journals
and newspapers and websites, reports of SBI and RBI are used for data mobilization.

Keywords: digital banking, rural financial inclusion, economic development

Introduction Mobile banking and computers, debit cards, credit cards,

Financial inclusion standing is most likely to boost through debit and credit cards, card-swipe or point of sales (POS)
technological interventions as there are distribution machines and digital wallets
challenges because of localized constraints. Typical banking
models don't seem to be possible for less price transactions, Achieving a Digital Economy in Rural Areas in India
deposits, loans, etc. in such regional area digital service is
essential in nature. There's a scarcity of awareness of
financial product, there's a high demand of practiced and
trained work force. Unbanked economies have raised the
potential of digital technology, significantly within the
mobile area, to measure the impact of technology in
financial inclusion. This paper highlights Digital banking
services which become an important disciplinarian of
banking access in rural financial inclusion for economic
development of countries. Where banks generally did not
reach rural sector, the accelerated advance of adaptable
networks and subscriptions has offered administration Fig 1
technology for adaptable banking services. Flexible
financial service is today accessible in more than 90 India basically has more than 75% of the country’s
countries. Using mobile cash transfers and payments may be population which residing in rural area. Therefore India is
opening for several into the formal financial set-up. planning to achieve
Information records of a customer’s transfers and payments  Number of connected rural customers is anticipated to
activity will become the premise of credit marking that may extend from one hundred twenty million in 2015 to
facilitate mobile digital borrowing. The switch from nearly three hundred fifteen in 2020.
informal borrowing and saving to the formal system (banks,  Over ninety three of individuals in rural Asian nation
micro-credit and -savings establishments, cooperatives and haven't done any digital transactions. So many scheme
mobile money services) will facilitate access to finance that of government have introduced.
wasn't otherwise obtainable.
Commonly in rapid moving technology determined Digital Banking Services for Financial Inclusion
industries, even in economic development the success is In an unbanked market, the challenge of deciding whether to
often new regulatory challenges of policy. The same lend (and if thus, what quantity for what period, and at what
network effects that create it difficult at the beginning to interest rate) to villagers with no credit record is being met,
induce the mobile banking services sector moving then among different ways that, by analyzing their mobile
modify it to require off and grow explosively, additionally cash behavior patterns. By generating credit scores from
carry a risk of concentrating market power within the algorithms applied to customers’ mobile cash dealing
leading suppliers. A Cashless Economy is associate degree histories, MNOs are unlocking credit for population teams
economy during which every kind of transactions are that neither before had access to formal monetary services.
through digital suggests that. It contains e-banking through This is also making new regulative policy queries, as solely

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the leading mobile cash platforms have the dealing history conjointly a ‘regulatory piece of ground. ’Whereas section a
information. Again, regulators should struggle with pair of celebrates the success to-date however suggests that
questions on wherever reward follows innovation and the majority of the success is however to come back, section
investment, and at what purpose a customer’s information three turns to what's so one thing of a piece of ground. it's
belongs to him or her, or ought to be accessible to would-be only too simple for regulation to impede growth in mobile
lenders apart from the identical mobile cash supplier. money services, or for the absence of well-judged and well-
Currently exciting advanced technological are timed restrictive intervention to lead to a market dominated
manufacturing thrilling results for rural financial inclusion, by one player facing no purposeful competition.
and assuring to take-up doors out of poorness, however their
success depends on a posh mixture of restrictive policy Conceptual Definitions
problems several of that have very less standard. Digital banking: it is digitalization of all traditional
The purpose of this paper is to shed light-weight on a banking actives and programs that historical were only
number of the foremost vital problems that policy available to customer when physically inside of a bank
manufacturers and regulators face in fast the Unfold of branch
mobile money services, whereas guaranteeing that the
market develops competitively instead of changing into Rural financial inclusion: is a process of ensuring access
obligated to a really tiny variety of dominant players. It to appropriate financial products and services needed by
focuses on the problems that have most at stake and are the vulnerable group such as weaker section and low income
foremost pressing instead of making an attempt to handle group in rurle sector at an affordable price
each doable relevant regulative or competition issue. In
doing thus, the paper aims to assist regulators support the Economic development: The digital age is transforming
key contribution of ICT to digital money inclusion everything the nature of markets and products new
exploitation mobile networks, introducing those who are technology drives economic development. Societies are in
unbanked and under banked into the digital economy. The constant transformation with new ideas challenging old one
World Bank has said mobile cash as a ‘success story’ that's

Digital banking services like cash-transfer, payment of bills, on line payment for goods purchased

Source: Safaricom 2014-5 results presentation

Fig 2

Roadmap for Going Cashless and Digitalization Solicitors (2016) [1] is highlighted the mobile banking
 Electronic Fund Transfer Systems services towards financial inclusiveness by using
 Debit card and Credit card mobile cash transaction and payments may be
 Internet Banking a beginning for many sector used in the formal economic
 Mobile Wallets system. The information records of a customer’s
 Banks Pre-paid cards transactions and payments movement can become the
 Point of sale premise of credit rating which will make possible digital
 Mobile Banking banking borrowing through mobile. The changes from
 Paytm informal borrowing of banks, micro-credit and -
 Google pay savings sector, cooperatives services will facilitate access to
finance that wasn't otherwise obtainable through the formal
Review of Literature system.
Mr. Rory Macmillan, Partner, Macmillan Keck Attorneys & Athifa Mymoon (2017) [2]: has brightened the fact that a

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cashless economy is secure, it is clean. We have a study has been collected from RBI bulletin, Ministry of
leadership role to play in taking India towards an Finance, RBI annual reports, banking progress in India and
increasingly “digital economy”. Thus, as citizens and youths from various reputed journals, magazines, newspapers, e-
of India it is in our hands to promote this magnificent India journals, etc.
encouraged by our PM Mr. Narendra Modi who has a bright
vision towards the upcoming of future India. Big success Initiatives of RBI and Government to put off the Use of
and it will help to attain vision of “Digital India” Cash
T. O. Jayasree, (2016) [3] highlighted in their research work 1. Government is also encouraging mobile transactions.
that financial inclusion is an important tool to achieve The RBI hadhighlighted certain guidelines that allow the
inclusive growth. The study also focus that inclusive growth users to increase their limit to Rs 1, 00,000 based on
can be made possible by making banking more inclusive certain Know your customer verification.
through expanding the coverage of banking service by 2. Various incentives offered by government to promote
reaching the rural people. digital India on Cashless India:
Paramjeet Kaur. (2014) [4] in their research focused on the 3. On digital transactions up to rupees 2000, Service Tax of
rural population in India that the needs social improvement 15% waived off,
and attention to financial inclusiveness. To improve the
finanacial inclusiveness the government made policies in the Apart from this Universal banking also took an initiatives
public interest after Prime Minister of India announced the for inviting rural people towards online transactions for this
launch of Pradhan Mantri Jan DhanYojana, a scheme to purposes on simplifying the customer experience, India
bank the poor. The spirit of pushing economic development initiated three steps that is:
is the main agenda by making a mandate to have aadhar. 1. JAM- Jan Dhan Yojana -Direct transfer of fund from
government to individual account digitally like LPG
Statement of the problem cylinder subsidy
Indian rural population is still far away from the mainstream 2. Aadhaar -national biometric identification system for
of digitalization banking transaction because of their opening an account
financial exclusiveness. The governments have made many 3. Mobile - use of a mobile number to allow clients to link
policy initiatives to involve low income group of rural accounts for easy transfer of fund through paytm and
people. But then also there is less awareness towards Google pay. Nearly 280 million accounts have been
banking digital services. The current study is significant in opened from August 2014.
the contest of varies digital transaction towards financial
inclusions and to look after the breach at the people end. Digital Payment Methods
The Digital India programme is a flagship programme of the
Objectives of the Study Government of India
1. To study the factors which considered utilizing digital “Faceless, Paperless, Cashless” is one of professed role of
banking services in rural sector for low income people in Digital India. As part of promoting cashless transactions and
India. converting India into less-cash society, various modes of
2. To analyze the awareness regarding digital banking digital payments are available.
services in rural areas.
3. To assess the implications of customers perspective Different types of online financial transactions
towards satisfaction on digital banks services with  National Electronic Funds Transfer (NEFT) NEFT is a
respect to internet & mobile banking. nation-wide payment system facilitating one-to-one
4. To understand the convenience level of the rural funds transfer. NEFT operates in hourly batches - there
customers in using digital banking services. are twelve settlements from 8 am to 7 pm on week days
(Monday through Friday) and from 8 am to 1 pm on
A Cashless Economy challenges in India Saturdays.
There are many hindrances in making Indian economy as a  Real Time Gross Settlement (RTGS): RTGS is defined
cashless economy. Few of them are as follows:- as the continuous (real-time) settlement of funds
1. Currency denominated financial system: transfers The RTGS system is primarily meant for large
2. Giving important to Cash Transactions: value transactions. The minimum amount to be remitted
3. Less awareness about ATM which mainly use for cash through RTGS is 2 lakh.
withdrawals and not much for any other purpose.  Electronic Clearing System (ECS): ECS is an alternative
4. Financial illiteracy. method for effecting payment transactions in respect of
5. Mobile Internet saturation is very weak in rural India the utility-bill-payments such as: telephone bills,
electricity bills, insurance premier, card payments and
Research Methodology loan repayments, etc.
The data collected for the study is a secondary data. The  Immediate Payment Service (IMPS): IMPS offers an
present study is descriptive in nature. The study exclusively instant, 24X7, interbank electronic fund transfer service
depends on mainly secondary data. The data used for the through mobile phones.

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Fig 3

Analysis facilitate to achieve dream of “DIGITAL INDIA”

It directly indicates that even in 2016, the bank facilities are
very less, in semi urban area around 20% approached. But References
in urban area it is approximately 100% achieved 1. Rory Macmillan, Partner, Macmillan Keck Attorneys,
Solicitors. Digital financial services: Regulating for
Interpretation financial inclusion. An ICT perspective The
With above analysis we can interpret that in rural area still International Telecommunication Union (ITU), 2016.
banks should be located and see to that digital facilities ISBN: 978-92-61-22181-2 (paper version)
should reach to rural people with large in number. And 2. Athifa Mymoon. Cashless Economy (Digital India)
financial awareness should be created among rural people, SRM University kattankalathur, 2017.
3. Jayasree TO. Current initiatives and challenges of
Cyber Security for Digital Payments financial inclusion programme in India. International
 Digital payments are likely to cost more if the National Journal of Engineering Research and Modern Education
Democratic Alliance (NDA) government decides to (IJERME), 2016.
impose a token 'security fee' or cess on each online 4. Paramjeet Kaur. A study on financial inclusion- Role of
payment. Indian banks in implementing a scalable and sustainable
 According to several media reports, the government is financial inclusion strategy, international Journal of
contemplating imposing a cybersecurity cess on e- Management, 2014.
payments companies. 5. Reserve Bank of India- Report
 This 'security fee' or cess like the Swachh Bharat cess, 6. Magazines and journals
could be used to create better infrastructure for secure 7. Google search.
digital transactions.

Suggestion for Achieving Cashless India

1. Superior accessibility of cyber to control techniques with
strong verification measures should be implemented by
mobile e-wallet companies.
2. Insist the rural people to have Bank accounts
3. Government fees should be erased
4. Tax rebates for consumers and for merchants who adopt
electronic payments.
5. Making completely safe and secure of Electronic
payment infrastructure.
6. The Reserve Bank of India too will have to come to
terms with a few issues.

Conclusion
A cashless economy is safe and secure, it's clean. We are
having a leadership role to play in bringing India towards
associate progressively “digital economy”. Therefore all
rural and urban youths should be promoted that is in our
hands to push this glorious India inspired by our PM Mr.
Narendra Modi WHO features a bright vision towards the
approaching of future India. Massive success and it'll

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